Why did Tapwave & Gizmondo fail?

I am a firm believer in the concept of open platforms, open standards, and commodity hardware, when mixed together can lead to interesting things. This concept of “insta-company” which I wrote about long before it became fashionable first played out in the data centers, and then in the enterprise, as we started to see the appliance-ing of software. Infoblox and Neoteris (acquired by NetScreen/Juniper) are good examples. In past 12 months, we have seen the same forces make their entry into the consumer market, with mixed results. iPod, arguably the most successful consumer device thus far in the new millennium is an apt illustration of powers of commoditization harnessed in a proper manner.

At the same time things have not worked out quite as well for other consumer device makers. Last week Tapwave, a Palm clone maker kicked the bucket. Gizmondo, the gaming handheld is gone before even it got a tan. Why did these companies fail? Four reasons.

In the consumer market, however, there are some intangibles that can make or break a product. In case of Apple iPod, the intangible was the coolness factor and the iconic white headphones, and lots of love from the hip-hop community. Apple could not have predicted it, but it happened. In comparison, Gizmondo went looking for B & C-list celebrities and well, we know the story.

Tapwave & Gizmondo were trying to establish themselves as gaming platforms, at a time when most of us knew that Sony PSP and Nintendo DS were coming. Those two are more established names in the gaming market, and in mass markets, established brand names win. Apple is a good example. When Sony PSP is on the market, as a consumer you are going to gravitate towards that device because you know Sony has a bigger brand, more titles and you can expect after sales support. As a consumer, there is no hesitation in handing over your dollars.

Techdirt is right in pointing out that the lack of titles for these two platforms was a main reason they never got traction. There was a lot of things which needed to go right, before Tapwave and Gizmondo got market traction. Both companies had to seed an ecosystem of developers, so that they could get games for their platforms. And while they were doing that, they had to build a brand, and develop hardware. In other words, it took too much effort and too much money to do all that. As a start-up, you just don’t have the resources (and money) to make it happen.

There is another little thing which many start-ups ignore: they try and cram too much in one device. One of the biggest reasons why people love iPod is that it does one, and that is play music. Tapwave and Gizmondo could not figure out what they really wanted to do best – play music, surf the net, play games or what.

So if you are a consumer electronics start-up (and there are many given the number of VCs scrambling to fund one or more such efforts) you need to avoid the four mistakes made by Gizmondo and Tapwave. Here are four things you can do to make your chances better:

Focus on one function and forget about multitasking. Impress customers with your best feature.

Ignore the early adopter, and make the device easy enough to pass the “mom test.” Mass market makes companies, A-list geeks don’t.

Looks matter – regardless of what people say, like in love, looks matter. People like beautiful and aesthetically pleasing objects. They are willing to pay an extra $200 for a simple hard drive. Steve Jobs knows that.

You can’t buy buzz – buzz happens, because people love your products. Simple as that. If you are great, in this over-connected web-enabled world, people will find you. Learn from Slim Devices.